Hold IDFC FIRST Bank: target of Rs 85: ICICI Securities

ICICI Securities's research report on IDFC FIRST Bank

IDFC First Bank (IDFCFB) has reported in line Q4FY24 PAT of INR 7.2bn (up 1% QoQ and down 10% YoY) with improvement in slippage and gross NPA. NII growth remains strong at 24% YoY though elevated opex (up 29% YoY) led to an increase in cost to income (C/I) ratio YoY. Gross advances growth (up 6% QoQ) was strong with deposits growth (up 10% QoQ) continuing to surprise positively. The bank expects C/I to be broadly stable in H1FY25 and see material improvement in H2FY25. It also hinted at upward normalisation of credit costs in H1FY25 with FY25 guidance at ~1.65% vs 1.3% in FY24.

Outlook

We maintain our HOLD rating on the stock with an unchanged target price of INR 85,valuing the stock at ~1.7x FY25E ABV. While we ppreciate strong deposits growth of IDFCFB and broadly improving RoA trajectory, we highlight near-term pressure due to broadly stable C/I and upward normalisation of credit costs.